Economic growth creating Rail can be self funding (debt, company, tax)

[John-UK]

An essential tool in the creation of prosperity in a community is railroads of all types. It is knowing how to fund them. They are self funding, however we allow the growth they create to appropriated by private individuals and organizations. Few rail networks are viable via ticket price. The real funding is reclaiming the "economic rent" they create. Feed the economic rent back into the rail tracks and we will all have superb self funding transportation.

Rail Networks, like Metros, Create Economic Growth

Many have no idea what influence rail networks have on a community - they are instrumental in the economic growth of a community and sometimes the key aspect, as in rapid-transit rail in cities. Full city-wide metros create economic growth all around. Close down London Underground or New York's Subway tomorrow decline will be rapid.

Real Gains From Rail is in Land Values

Look at British rail magnet George Hudson in the early to mid 1800s. He made his money from the increased value of the land the railroads created, not charging for tickets. He knew where the money was made with railroads - it was not in running them.

Hudson had his own construction company and bought up land in prime spots where his railroads went. He knew before others where his railroads would go and where the stations would be. He creamed it off in increased land values and charging high rents, and allowed the railroads to fall into disrepair as ticket prices were just enough to maintain the network in the long run, with the government having to take it over it was so neglected. Private profit and the debts socialised with us picking up the tabs.

Some people misguidedly say we should privatise all railroads, and all to do with them - so they can cream it off again, and yet again the taxpayer picks up the debts in the end. And they then blame public ownership as being useless and inefficient, when all the taxpayer did, or will do, is pick up the shambles - as usual. And the private sharks make off with the gains.

Politician, Morrison at the same time as Hudson wanted the French system of public ownership and renting the lines, or time on the lines, and use the rents to maintain the infrastructure. He was overridden by a lobby by Hudson. The railroads eventually declined to the point of being ramshackle all over the country. We are going to make all the same mistakes again.

The London Underground Jubilee Line Example

The example of the London Underground Jubilee Line extension - £3.4 billion to build and the land values around it rose by £14 billion. Before Crossrail in London is open, which is a west to east line under the city cost £18 billion to construct, land values around the under construction line rose. Did land values elsewhere drop as a result of the lines? No. The lines create commonly created economic growth - common wealth.

The Current Tax System is Destructive - Encourages Free Riders

The difference between a highway robber and a free riders is that the free rider does not have to draw a gun to take what belongs to others.

Railroads create economic growth. This crystallizes into land values. If this was recycled back into funding the nations rail infrastructure everyone would share in the net gains. But it is not. The current laws dictates that this surplus income from land values is delivered as windfall gains to the landowners.
Thus the transport sector is transformed into a sophisticated mechanism for redistribution income away from low-income taxpayers who fund infrastructure to asset rich people.


This is how the trick is perform in relation to railroads:

1. Government tax on people's wages, their effort - and sales, what they buy
2. Subsidies given to railroads using community taxes
3. Strategically located land rise in value because of the railway
4. Windfall gains pocketed by landowners
5. Shortfall in funds to renew rail infrastructure
6. Government raises rates of Taxes on Wages and Sales.
7. Go to No. 1 above and the cycle starts all over again.

The Enterprise Economy Implodes.

This is exactly what we do not want. Money is poured down a giant sluice, the Land market. Taken as windfalls by private owners. Landowners in the UK are the richest people in the country. This viscous spiral implodes the enterprise economy. The spiral must be stopped.

Because of income tax, taxing a person's efforts, some people are priced out of work. So the government increases taxes to compensate the losers, which creates even more losers. The ripples spread destruction deeper into our communities. The windfall gains to landowners from new rail or road elevates house prices beyond the reach of some people. This prevents low income "key workers" from moving into communities where they are needed to administer schools, hospitals, fire and law & order.

So a transport system that supposed to enhance mobility achieves the opposite effect. It becomes an instrument for discrimination against those on the lowest incomes. Immobility is frozen into the structure of the community.

The economic growth, in the from of "economic rent" needs to be fed back into the mechanism that created that wealth - the maintenance, advancement and expansion of the rail tracks. Reclaiming the economic rent the steel rail create is essential to ensuring a transport mechanism that enterprise can freely prosper on. Land Valuation Taxation is the pefect method to reclaim this commonly created wealth.

Free Riders Pillage And We Do Not Recognise It

Few people notice. Instead, the pursuit of the "unearned increment" from land becomes a national obsession. What fuels this obsession? Housing. The president of the Campaign for the Protection of Rural England said:

"housing offers a better chance of turning a tax free profit than any other form of (taxed) personal investment".

Our culture is supposed to be one of enterprise, however it is now driven by a parasitism that undermines freedom. We institutionalise as "normal" the processes that create and segregate the rich from the rest who are materially, culturally and psychology impoverished.

Because this chain of events is now regarded as normal, it is invisible. We are not conscious of its influence, which is morally and materially corrosive. We celebrate the most sophisticated form of pillage because we do not recognise it as such. The free-riders are free to rip-off the majority without retribution. Most who do, do not realise what they are doing.